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Chinese traders will keep their massive postal subsidies

13 Sep 2018, 17:23 ... -subsidies

The Universal Postal Union failed to raise the ultra-cheap rates China pays for postage to the West at its Extraordinary Congress last week. As Trump threatens to impose US postal dues unilaterally, is this the welcome end of secretive UPU rates; or will Trump’s letter-bomb result in chaos?

Specialist in parcel delivery ParcelHero says it looks likely British shoppers will have to continue to unwittingly support massively subsidised Chinese traders’ postage costs for at least two more years; after the Universal Postal Union (UPU) failed to increase China’s ultra-cheap international rates at its controversial meeting last week.

The courier comparison site says the only chance of immediate reform is if President Trump carries out his threat to abandon the entire agreement – but that could lead to a free-for-all on international postal dues, and do more harm than good.

ParcelHero’s head of consumer research, David Jinks says: ‘British and American online retailers have long-complained that Chinese eCommerce letter-size packages to the West are massively subsidised by our postal services, thanks to secret rates arranged by the UPU. Now President Trump is considering unilateral action because the UPU failed to agree reforms. Whether Trump’s letter bomb-shell will ultimately be good or bad news for UK and US traders remains to be seen.’

Explains David: ‘Before the UPU’s meeting on the contentious issue in Abu Dhabi last week, Trump demanded that it must agree future rates that would “fully reimburse the USPS (United States Postal Service) for costs to the same extent as domestic rates for comparable services”. Instead the UPU decided to kick the decision into the long grass; and says it will look at this again at its next meeting in 2020.’

Observes David: ‘The UPU says it “achieved a major success by approving a compromise proposal.” The decision to push the question of international postal remuneration into the next decade certainly doesn’t look like a ‘success’ to us: unless the ostriches’ defence of sticking its head in the sand can be considered successful.’

Says David: ‘Last week we revealed it costs vastly less to send a bracelet from Beijing to Birmingham by post than it does to send the same item from Bromsgrove to Birmingham; and that Chinese traders may be paying less than 1/2p to send a packet of earrings to the UK. Small wonder British traders are crying foul. Now it looks like the US is about to set a ball rolling that could end this huge postage price imbalance – but at what cost to international agreements?’

Warns David: ‘President Trump threatened that, unless the UPU agreed to fully reimburse the USPS’ costs, then the US will consider taking ‘any appropriate actions’ to ensure these rates. He’s given his Secretary of State until November 1st to come up with recommendations for future action, including the possibility of ‘adopting self‑declared rates’.

David continues: ‘Not for the first time, President Trump is opening up a can of worms over overseas trade. If the US declares its own postal dues, China may also impose its own rates and we could end up with a tit-for-tat situation in which every country, including the UK, sets its own dues; overthrowing an arrangement that has been in place for many decades.’

Concludes David: ‘If the UK joins in any move towards fair postal remuneration, the result could be a huge boost for UK sellers as cheap Chinese imports vanish. But it could equally work against British retailers importing stock from overseas, or exporting to countries who may be imposing new postal dues. With Brexit just around the corner, perhaps this is a fight we hope Trump won’t pick for now’.

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